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75 years of Indian business: How we began and how far we have come

Key developments in history that shaped the post-colonial era of Indian business and economic development.

August 15, 2022 / 06:41 PM IST
The Central Bank of India first issued credit cards in 1980.

The Central Bank of India first issued credit cards in 1980.

I must begin with a clarification: the history of Indian business is not as young as India as an independent nation. It goes back several centuries before India opened up its economy in the 1990s, even before it became an independent country. The 1990s were not the first time the Indian economy was open to the globalising forces, nor was this the first time we saw the Indian economy grow. We can begin by asking: did India always lag behind the West in economic development? The simple answer is, no.

In 1700 AD, India’s share in world GDP was 24.4 percent, ahead of China’s share at 22.3 percent (Maddison, 2001). During the hundred years between 1850 and 1950, India was home to the fourth largest cotton mill industry in the world. Trade was the backbone of Indian business, efficiently supported by a flourishing banking and exchange business. India’s trade with the world reached unprecedented volumes, and the economy opened to globalising forces from around the world.

At the dawn of the twentieth century, Indian business firms were not only working with the Britishers, but also entrepreneurs from European and Asian countries. This coincided with the political movement for India’s independence from the British colonial rule and the call for Swadeshi even in business - hundreds of Swadeshi firms were formed by Indian capitalists. At the same time, rich with handsome exploits from global trade, they began investments to develop large-scale industry.

India after independence is a mixed story of capitalism and government regulation of business. The free trade narrative changed in post-colonial India. “The government of independent India decided that trade was undesirable, and money lending was evil. The socialists among the Indian politicians wanted a Soviet-style industrialisation. Metals, machines, and chemicals were to be the favoured fields. The technology had to be bought from western markets,’’ says Tirthankar Roy in ‘Business History of India: From enterprise to capitalism’, a book I highly recommend for those keen on getting to know the history of Indian business.

In the 75 years since India became free from British colonial rule, the Indian economy has witnessed several economic transitions. The most significant has been the Indian  economy’s transition from a free trade regime to a socialist and protectionist regime in the 1950s and 1960s, followed by a wave of reforms in the 1990s which opened up the Indian economy.

As we turn 75 years old as an independent country, we have a long and rich history to take stock of, ponder over and think. After all, business history has a key role in developing and enhancing our understanding of how businesses evolved, in response to and in spite of the prevailing social and economic environments of the times in the country’s past.

Here are the key developments in history that shaped the post-colonial era of Indian business and economic development:


1. Bombay Plan, 1944: Around 1938, the leadership of the Indian National Congress laid out a vision of economic development in India: focus on industrialisation and devalue trade. This culminated in The Bombay Plan of 1944 which heralded an era of socialist planning. People involved in drafting the plan agreed to protectionism as the means to achieve industrialisation, and public opinion on foreign capital hardened.

2. Labour laws: Within a year of Indian independence, acts on minimum wages and labour regulations in the factories came up. Minimum Wages Act empowered the governments at both the Centre and the states to determine the amount of wages paid in factories. This was intended to ensure decent standard of living for all, but gradually, turned into a tool for red tape and industrial control. There are more than 1,200 minimum wage rates in India.

3. Factories Act, 1948 was another socialist addition. Enacted in 1948 to protect workers in factories, it sought to consolidate the existing law by adding provisions for penalties of jail term for violations and made provisions for inspection of factories.

4. Development Finance Institutions: Industrial Finance Corporation of India, India’s first development bank, was formed in March 1948 to facilitate long term financing needs of Indian industry, which was still in its nascent stages. In less than a decade, the government constituted the Industrial Credit and Investment Corporation of India (ICICI) in 1955 to facilitate long and medium term financing to Indian businesses, in partnership with the World Bank and private investors. Over the next ten years, the Industrial Development Bank of India (IDBI) was created for the same purposes. Today, both ICICI and IDBI are successful banks.

5. The Nationalisation wave: The Indian government pursued nationalisation of major industries in the decades following the 1940s. In 1948, the Reserve Bank of India (RBI), which was then a shareholders’ bank, was nationalised. In 1953, Air India was nationalised. In 1955, the Imperial Bank of India was nationalised to create the State Bank of India. The nationalisation wave touched the aviation, mining and oil and gas industries.


6. The age of planning: India embarked on the age of planning in 1950 with the establishment of the Planning Commission, a central planning body. The five year plans followed.

7. The rise of the consumer brands: The 1950s can be best remembered for the emergence of some of India’s best-known consumer brands - Godrej typewriters, Ambassador car, Bajaj scooter, Usha sewing machine, et al.

8. The advent of technical education: Prescient about the demands of post-war industrial development in India and with the ambition for advancement in engineering education, the government established India’s first engineering education institution, the  Indian Institute of Technology in Kharagpur, in 1951. Soon, five other IITs followed - IIT Bombay in 1958, and IIT Kanpur and IIT Madras in 1959.

9. The beginning of License Raj: In 1956, the Indian Parliament passed the Industrial Policy Resolution, marking the beginning of the Licence Raj. The government laid out the list of industries it would set up, and the industries whose production it would control through licenses. Drawing heavily from the resolution, the second five year plan began in 1956. The same year, life insurance industry was nationalised, and state-led Life Insurance Corporation (LIC) was established.

10. The advent of India’s nuclear programme: India’s First Nuclear Reactor Apsara went critical in August of 1956 at Bhabha Atomic Research Centre in Bombay, announcing the arrival of India’s nuclear energy programme. Built in 15 months by Indian Engineers, the reactor also showcased India’s competencies in nuclear energy.

11. Decimal system of coinage: In April 1957, Indian coinage went decimal and changed from the rupee, anna, pie system to decimal currency where each unit of currency can be divided into 100 sub-units.

12. Reliance and Rourkela Steel: On one hand, Gujarati businessman Dhirubhai Ambani set up the trading house Reliance Commercial Corporation in 1958, the Indian government commissioned the Rourkela Steel Plant in 1959. The plan was the first integrated steel plant in the public sector in India operated by the Steel Authority of India and set up in collaboration with West Germany.


13. More IITs and IIMs:  IIT Delhi was set up in 1961. Indian Institutes of Management are set up in Calcutta (now Kolkata) and Ahmedabad the same year.

14. The Bhakra Nangal Dam opened in 1963, the earliest river valley development schemes undertaken by India after independence.

15. India entered an era of Green Revolution In India in 1965 that continued till 1977, leading to enhanced food crops production. Form being a food deficient country, India became one of the leading agricultural nations in the world.

16. Daily TV programming transmission began in 1965as a part of All India Radio, and the first commercials were aired on Vividh Bharati in 1967.

17. India faced economic challenges in the 1960s. Shocks such as wars (1962, 1965), and droughts (1965-66) put Indian economy under serious economic pressures.

18. While the Indian rupee was devalued in 1966 on weak micro-indicators, 14 leading private banks were nationalised in 1969 as part of Indian government’s socialist policies. The same year, the Monopolies and Restrictive Trade Practices Act became a law.

19. To regulate foreign investment in India, the Foreign Investment Board was established in 1969.

20. MRTP (Monopolistic and Restrictive Trade Practice), 1969 came up to regulate the expansion of industrial houses with assets in excess of Rs 20 crore.


21. The decade began with the vision of Industrial Policy Resolution 1956 continuing with the Industrial Licensing Policy comes into force, confining the role of large business to core, heavy and export-oriented sectors. The industrial policy of 1973 cleared hurdles for serial nationalisation of many sectors.

22. In 1971, the Indian government abolished Privy Purses in a bid to reduce the government’s revenue deficit. The system of Privy Pursefacilitated payments to royal families of all erstwhile princely states in return for their agreement to integrate with India in 1947.

23. The Contract Labor Act, 1970 stipulated that firms could not hire contract labor in industries where labor was seen to be essential to the main activity. It was an important act to preserve labour rights.

24. Between two rounds of bank nationalisations in the 1960s, the Indian government nationalised general insurance in 1972 through the General Insurance Business (Nationalisation) Act, 1972. Coal mines were also nationalised in four rounds, in 1971, 1972, 1973 and 1975.

25. The year 1973 saw the "Oil Shock" (OPEC oil crisis) leading to an exponential increase in oil prices, which pushed up inflation and led the world to a phase of global recession including India which was already under economic stress throughout the 1960s.

26. The longest rail service in India between Mangalore and Delhi began in 1973.

27. The Foreign Exchange Regulation Act (FERA) came into effect in 1974 which regulated transactions in foreign exchange and securities and mandated that foreign investors could not own more than 40 percent in Indian enterprises. Within four years of the Act, American multinational IBM and Coca Cola shut their operations in India.

28. The same year, the first oil well is found in India in Sagar Samrat, off Bombay High.

29. India’s first Indian satellite Aryabhatta was launched from the Soviet cosmodrome in 1976. It was built by the Indian Space Research Organisation.

30. To abolish bonded labour in India, the Parliament of India enacted the Bonded Labour System (Abolition) Act, 1976.

31. The Industrial Disputes Act, 1976 stipulated that firms with more than 300 workers seek government permission before laying off workers.

32. The Urban Land Ceiling Act, 1976 came into force, disallowing ownership of vacant land beyond the government ceiling with the discretionary powers resting with the state governments for possible exemptions.

33. 1977 saw the Reliance Industries launch its initial public offering. In earlier decades had seen the company diversifying its business which helped it grow.

34. 1978 was the year of India’s first experience with demonetisation. The government withdrew the legal-tender status of Indian Rupee currency notes of 1,000, 5,000 and 10,000 to flush out black money from the economy.

35. The year 1978 was also known for India’s first home loan disbursed by the Housing Development Finance Corporation Ltd, or HDFC, and the launch of its first television commercial.


36. The industrial policy of 1980 expanded the Open General License (OGL) list for imports, eased industrial controls, allowed limited external borrowings, and initiated reforms in indirect tax.

37. The Central Bank of India issued India’s first credit card in 1980.

38. R. Narayana Murthy and six other co-founders set up Indian IT major Infosys in 1981.

39. 1982 was a tough year for Mumbai’s textile industry as mill workers’ strike led by union leader Datta Samant stalled operations. The same year saw the Indian Oil Corporation commissioning India’s first public sector petroleum refinery, and the establishment of NABARD, the National Bank for Agriculture and Rural Development (NABARD), for the promotion of agriculture, small scale industries, and other rural crafts.

40. Early years of India’s automobile revolution took root in 1983 with the launch of the first batch of Maruti cars.

41. India was shaken by world’s worst industrial disaster in 1984 when Union Carbide’s pesticide plant in Bhopal saw a gas leak. Several thousand people died in the disaster and its effects continue to linger even today.

42. Indian government launched major tax reforms in 1985.

43. The next year, in 1986, BSE launched India’s first equity index. The same year, India witnessed the Bofors Scandal, in which many Indian politicians including then prime minister Rajiv Gandhi was accused of receiving bribes for facilitating the deal with the Swedish arms manufacturer.

44. Citi Bank launched India’s first debit card in 1987, followed by first ATM launched by the HSBC Bank.

45. Government set up Securities and Exchange Board of India in 1988 to regulate securities and commodities markets, and to protect the interests of investors.


46. The 1990s are best known for the external payments crisis that paved the way for the economic reforms of 1991.

47. The economic reforms of 1990s deregulated the economy, ended license-permit raj, and opened up the Indian economy for greater play of the market forces and competition with an aim to boost economic growth, create wealth and reduce poverty.

48. In 1992, National Stock Exchange was launched, and Reliance Group becomes the first Indian conglomerate to raise money in international markets. The same year, stock markets were shaken with the Harshad Mehta scam that highlights the need for tighter market regulation. The year also saw the Securities and Exchange Board of India Act, 1992, introduced to protect the interests of investors in securities, and to promote the development of the securities market, among other things.

49. Indian IT major Infosys launches IPO the next year. The same year, in 1993, HDFC receives approval for establishing a private bank, and Hindustan Unilever took over its largest competitor, Tata Oil Mills Company.

50. Indian Rupee was made convertible on the current account in 1994.

51. National Telecom Policy came up in 1995 that paved way for foreign direct investment as well as domestic investment in the telecom sector, and to enhance the penetration of telecom in the country. The same year, then West Bengal Chief Minister Jyoti Basu made the first cellular phone call from Kolkata. In 1997, Telecom Authority of India was set up.

52. 1999 was a big year for the Indian portal market as Satyam Infoway Ltd., India’s first Internet Services Provider, inked an agreement to buy IndiaWorld Communications Private Ltd or for 499 crores. The same year, Insurance Regulatory Development Authority of India was established for the insurance sector.


53. 2000s began with the privatization of insurance business with a 26% limit on FDI in the sector.

54. Several regulatory institutional structures came up in the 2000s. Competition Commission of India was set up in 2002, and Pension Fund Regulatory and Development Authority of India in 2003.

55. In 2006, Tata group acquired UK-based Corus in the largest ever cross-border acquisition by an Indian company.

56. 2008 saw the launch of Tata Nano by Tata Motors, pegged to be the world’s cheapest car.

57. In 2009, the Satyam scam was India’s biggest fraud involving the Satyam Computer Services, which was once known as the Crown jewel of India’s IT industry.

58. India’s first internet startups were set up between 1995 and 2000, beginning with (1996), (1999) and MakemyTrip in 2010.


59. In 2010, the 2G spectrum scam was a big blow to privatisation moves. The scam exposed corruption in the echelons of the government where officials were found to be undercharging mobile companies for frequency allocation licenses.

60. The bad loans of public sector banks reached Rs 59,972 crore in 2010.

61. India’s real GDP growth peaked in 2010 when it scaled 13.3 per cent.

62. India’s fiscal deficit for the 2010-11 fiscal year hit Rs 3.69 trillion, equivalent to 4.7 per cent of India’s gross domestic product, according to a Reuters calculation. Capital investment reached 39.8 per cent of GDP in 2010.

63. 2010s also saw the rise of several ecommerce players such as Flipkart, Myntra, Snapdealand Amazon marking the development of the consumer internet ecosystem.

64. The Make in India initiative was launched in 2014 to incentivise companies to develop, manufacture and assemble products.

65. Pradhan Mantri Jan Dhan Yojana, a financial inclusion program, launched in 2014 to expand affordable access to financial services for all Indians.

66. In the second demonetisation move in India’s financial history, the Narendra Modi led government announced in 2016 that the Rupee notes of 500 and 1000 were no more legal tender.

67. Constitution Amendment Bill 2016, which introduced the Goods and Services Tax (GST), paved the way for formation of the GST Council, one of the most significant institutions to come up in the 2010s.

68. In a move to implement a uniform tax structure throughout the country, the Goods and Services Tax Bill was passed in 2017. The same year, the GST tax was introduced. The move served to create a single common market that allows for free flow of goods and services.

69. The Real Estate (Regulation and Development) Act, 2016 mandated establishment of a Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector. The bill was passed in 2016.

70. The foreign portfolio investors (FPIs) inflows crossed Rs 1 lakh crore mark in 2019, the first time since 2013.

71. In spite of several gains and important steps, the Indian economy since 2019 saw several challenges. The nominal GDP in September 2019 was at 6.3 per cent, its lowest in the decade. Projects funded by banks declined by over half since 2014 in 2018-19. The manufacturing/GDP ratio reached 15 per cent. Corporate profits/GDP ratio hit a 15-year-old low at about 2.7 per cent.

72. Unemployment climbed to a 45-year high in 2017-18, and nearly doubled by 2018-19, according to household surveys by Centre for the Monitoring of Indian Economy.

2020s onwards

73. In 2020, the government’s Production Linked Incentive (PLI) was launched with an aim to turn India into a world class manufacturing centre. The PLI was also aimed at foreign investors to invite them to establish manufacturing units in India.

74. In 2020, India banned 59 Chinese mobile apps in a move to secure defence, the state and the public order. Same year, Indian ministry for Road Transport and Highways announced that no bids from Chinese companies would be allowed in highway projects.

75. National Infrastructure Pipeline (2021), National Monetisation Pipeline (2020) and the PM Gati Shakti (2021) were launched to bridge the infrastructure deficit in the country by aiming to building efficiency and assets through social and economic infrastructure projects including in roadways, railways and airports, power transmission lines, energy and renewable energy related assets, warehousing and sport-related assets.

Pallavi Singh is a freelance journalist and business historian in training at Queen’s University Centre for Economic History, Belfast. Views are personal. She tweets at @econhistorienne
first published: Aug 15, 2022 06:41 pm